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Rice subsidy? Economic Nationalism & Economic Imperialism!

How well off are Thai farmers? How well off are farmers in the Eurozone and USA? The fact is, Thai farmers are dirt-poor in comparison. How much is Thailand’s farm subsidy? And how much is the Eurozone and USA farm subsidy? The fact is, Thailand’s farm subsidy is a small fraction of Eurozone and USA’s farm subsidy, when taking consideration, the number of people involved.

So why has there been so much global out-raged over Thailand’s rice subsidy? Why has the press, like Reuters and WSJ continue to attack Yingluck’s rice policy?

Wikipedia defines Imperialism as “an unequal human and territorial relationship, usually in the form of an empire, based on ideas of superiority and practices of dominance, and involving the extension of authority and control of one state or people over another.” It is often considered in a negative light, as merely the exploitation of native people in order to enrich a small handful.

Thailand has a very long history of rice growing, and rice farmers are for centuries, are known as the “back-bone” of Thailand.

Even with a commodity product such as rice, to sell the rice, like most products, depend on product, price, place and promotion. In fact, as the globe talks about Thailand’s massive stock of un-sold rice, a great amount was sold and Thailand remained in the top three exporters of rice, pushing the sale of the higher price Thai rice, because of the rice subsidy scheme, to friendly markets and stressing quality. Also as a fact, Thailand’s prime minister, Yingluck, said her target was no the “Amount” but the price that Thailand would get on the rice. Yingluck, in answering the question in Parliament, asked by the opposition party, about the lost of the “Globe’s Largest Rice Exporting Position” by saying again, it was the price she was targeting, not the volume.

And as the globe began to attack the cost of the rice scheme, Yingluck said the scheme is part of an economic stimulus package of Thailand, as global economic condition is bearish. The fact is, some economist says the Yingluck spending on her rice subsidy, comes to only to a few percent of Thailand’s GDP of US$600 billion, while the added income in rice farmers hand, that went circulating in the economy, had about 5 times multiple, adding to the GDP.

However, Thailand is a politically divided country, with the elite establishment controlling much of what occurs in Thailand, including much of Thailand’s press. Even global press such as Reuters, with a track record of fiercely attacking Yingluck’s rice subsidy, has a long track record of being anti Yingluck and anti Thaksin, as its political coverage of Thailand, clearly indicates.

(Up-Dated 1) A coup had occurred, by Prayuth. The coup came after a combination of Suthep, former security chief of Abhisit lead protest and judicialization, rendered the Yingluck government not able to function. That un-able to function, coupled with opposing protest, from Suthep and the Reds, lead army chief to attempt to broker a deal, but he failed, and as a result took control. Sunsequent news from Suthep, says he an Prayuth have been working together to topple Yingluck. Prayuth deny the charges. The rice subsidy scheme has been stopped and corruption investigation, on the scheme has intensify.

(Up-Dated 2) Suthep said, he an Prayuth, have been working together, to destabilize Thailand, for the setting up of a coup, for a Thailand under a Dictatorship.

(Up-dated 3) Yingluck has been charged with “Failure to Stop Corruption” in the rice subsidy scheme, where the corruption, at this point, is “Alleged Corruption” by the anti-corruption agency, and Thailand’s Dictator Senate, is to start proceedings to “Impeach Yingluck.” Thailand’s anti-corruption agency, is called “Politicized” and rated “Boo” being among the worse in Asia, by the respected Political and Economic Risk Consultancy (PERC).

Corruption charges has been bought on Yingluck, in that Yingluck did not stop the corruption that occurred under the scheme. This is a first, in the Thai justice system, that the Prime Minister, is charged for corruption, for not stopping corruption, that at this point, are alleged corruption. The coup people are doing a stock-check of rice, and thus far, mixed results, such as soldiers stealing rice and some lost rice stock, that in sum, thus far, does not amount to a significant level, in the overall picture.

The issue also gained wide-spread statements. from units such as World Bank and credit rating agencies. In sum, they said, there are economic benefits, such as lifting the income of the poor and stimulating the economy, but there are also costs, such as book-loss, associated with un-sold stock.

1)

A Politicized Rice Subsidy

If you have been following Thailand, you know that the elite establishment has lost every election to political parties allied to Yingluck and Thaksin. What you may not know, is that the elite establishment says it is because of Thaksin & Yingluck’s populous policy, and thus, Thaksin and Yingluck “Bought the Votes of the Thai people.”

Therefore, with that conviction, that Thaksin and Yingluck have “Bought Votes” the elite establishment, is against their populous policy. The rice scheme, is part of that populous policy. Therefore, the elite establishment and its press, being most of Thailand’s press, have went attacking the rice scheme.

But under Thaksin, populous policy was about 100% about humanitarian and targeted economic stimulus, being the universal health care and village fund. Under Yingluck, her populous is about 80% humanitarian and economic stimulus, being higher minimum wage and agriculture subsidy. The other about 20% of Yingluck populous policy, is pure populous policy, but the reason for this 20% is that in the last election, every party on every side, was rushing out with populous policy, and so there was competition, to increase populous policy in Thailand.

Today for example, Thai rath, a mostly anti-Thaksin newspaper in Thailand, reported a “Fake News” as its headline, that the USA is inspecting Thailand’s rice for quality. Where did the question on Thailand’s rice quality originated? The attack on Thailand’s rice quality originated on the social network, as a rumor, that the anti Yingluck internet users crowd started to spread.

There is not doubt, attacking the Yingluck’s rice scheme, is a political move by the elite establishment, to place a wage between Yingluck and her voters base, to scuttle her in the next general election, only two years away.

It should be noted, that in polls after polls, Thai business people says the greatest risk to Thailand is politics. The fact is, the elite establishment is against democracy, and prefer the “Thai Style democracy” that says democracy must be tamed and control, to give the so called “Good people” the opportunity to get rid of the “Evil” of Thailand, being Thaksin.

The problem is, also in polls after polls, about 70% to 80% of the Thai people said they want democracy, meaning not “Thai Style” democracy. That friction, between Thai Style democracy and democracy, is where the Thai “Political Risks” comes from. And clearly, Yingluck is a main proponent of democracy and is against the Thai Style democracy.

And it is her populous policy, that have proven popular with the voters, along with the Thai people conviction towards democracy. Arguably, her populous policies, have helped develop Thailand’s democracy, and thus lessened the political frictions in Thailand.

The well known to hate Thaksin and Yingluck, Nation newspaper reports:

Nation 6/26/2013

Rice scheme demonstrates populism’s dark side

Tulsathit Taptit

BANGKOK: — Anyone can spend himself into trouble. It’s one kind of trouble if it’s your own money, but it’s another if it’s the taxpayers’. And it’s bigger trouble still if all logic cries out for you to stop throwing tax cash all over the place, but you have to weigh that against the wants of the people who voted you into political office.

The government is being squeezed, trapped between its own ambitious election promise and its stubbornness to see it through. Just about every single person outside the ruling party’s circle warned that buying a virtually unlimited amount of rice from farmers at Bt15,000 a tonne was a surefire way to commit budgetary suicide, but the government paid no attention. When something was purportedly being done for the poor, critics couldn’t do much except pray.

Even pro-government economists foresaw a disaster. They couldn’t look too scared, however, because not only was the prime minister nonchalant, but her big brother was firing on all cylinders in defence of the scheme. Thaksin Shinawatra told the world last September that the rice programme was so noble and economically beneficial that it should go on for several more years. The rest is history.

According to Thaksin, the rice scheme was providing economic gains three times its cost. No matter where his statistics came from, they have been overshadowed by the opposition’s more direct numbers. Money spent on buying overpriced rice from farmers, and processing and storing the produce, has dwarfed the income the programme has generated or will ever generate. Corruption is rampant. Huge amounts of rice have either disappeared or been left to rot, and Thailand has slipped behind Vietnam and India as the world’s biggest rice exporters.

To realise how desperate and clueless the government has become, one only had to watch a recent press conference chaired by Deputy Commerce Minister Nuttawut Saikua, a video clip of which has been circulating on the social media with a must-see tag. He was supposed to address key questions about the project, but answered none. “What have you been doing these past few days,” a reporter asked him and senior officials – who passed simple questions to one another like they were hot potatoes.

After months of trying to stand its ground, the government caved in a few days ago, cutting the guaranteed price per tonne to Bt12,000, and aid to each farmer’s family to Bt500,000. If that sounds reasonable, a vast number of Thai farmers do not think so.

Protests have taken place and are being planned, both by those opposed to the rice scheme and those benefiting or standing to benefit from it. “Courageous!” die-hard government supporters say. “Cowards!” scream farmers who have made financial arrangements with Bt15,000 per tonne in mind. “Told you so,” the initial critics of the scheme shrug.

It’s one thing to make a political U-turn when a project starts to go wrong, but it’s another to backpedal when all previous warnings that went absolutely unheeded are coming to a head. The “courageous” compliment also flies in the face of real legal dangers that the government is facing. The enormous cost of the rice scheme threatens to jeopardise the government’s budgetary mandate and complicate investment in other essential plans.

The government apparently feels that it has backtracked enough, while others believe that the rice scheme is only halfway down the slippery slope. The situation, therefore, is very tricky. Opponents think the government’s attempts to control the damage are far from sufficient, while affected farmers think the government has done too much. The government’s preferred choice is to stay precariously sandwiched, at least for the moment.

This is the problem with populism. Once it’s let loose, it can barely be reined in. Populism-oriented governments collapse not just because of financial strain of their own making, but also because of the resentment of those who have been made irreversibly dependent on the state and who can’t accept an about-face. Welfare is easy to give, but very difficult to take back.

What should the government do? A lot. For starters, it must accept that “You produce, we buy unconditionally” is a ludicrous economic concept. It’s as ridiculous as the tenacious refusal to let banks fail in the United States. Only there, they won’t allow the rich to fold, but here the poor are perceived as being the source of political power. Yes, politics is the art of doing the right thing for the wrong reason, and making the wrong reason seem right, but even in politics there are limits to how far you should go.

Unfortunately for the Yingluck administration, while there is a lot it should do, there isn’t much in the “can do” department. Losing face is arguably the least of its worries, though. The rice scheme and its failure have become intertwined with the political divide. Politicians give because they want to take, and in this case the prospective takers may have too much at stake to just drop it.

2)

Pork and Barrel Politics & Populous Policy Globe Over

While the likes of Nation and Reuters runs repeated criticism that Yingluck’s populous policy, such as the rice scheme, is “Buying Votes” the fact is, globally, there are massive levels of “Pork and Barrel” politics, or the elected officials, using government funds to support this group or that group. In fact, while Thailand’s rice scheme is costing the Thai government, perhaps US$10 of billions, the Eurozone and USA’s “Farm Bills” dwarf Yingluck’s spending.

It is interesting that Thais, while criticizing Yingluck’s rice subsidy as buying votes, few Thais are looking outside of Thailand.

Reuters report Adis Israngkura Na Ayudhaya, dean of the School of Development and Economics at the National Institute of Development Administration, says the scheme was always politically rather than economically motivated. “The government is using taxpayers’ money to buy votes. It’s not the welfare of the farmers they care about. It’s something they promised the public, an electoral thing, so at the next election they can say to people they kept their word,” he said.

Unlike in Thailand, where PM Yingluck farm subsidy was criticized for buying votes, by most global press, such as USA’s Wall Street Journal & Bloomberg, and Reuters, they are all silence now, on the USA Democrat Party is now relying on a “Farm Bill” to remain the majority in 2014.

The Hill, a specialize press on the USA Congress reports in June of 2013

“The quest to keep their Senate majority became more complicated Monday with the death of Sen. Frank Lautenberg (D-N.J.). New Jersey Gov. Chris Christie (R) is expected to appoint a Republican, which meansDemocrats will likely have to battle a GOP incumbent to regain the seat. Agriculture is a major industry in Montana, South Dakota, Arkansas and North Carolina, four states that are huge GOP targets next year. Montana and South Dakota are open seats following the announced retirements of Sens. Max Baucus (D-Mont.) and Tim Johnson (D-S.D.). Meanwhile, Sens. Mark Pryor (D-Ark.) and Kay Hagan (D-N.C.) are two of the chamber’s most vulnerable incumbents. Other rural states where Democrats face competitive races are Alaska, Louisiana, New Hampshire and West Virginia. Pryor and Hagan have listed the farm bill among their highest priorities and have urged colleagues to act on it. Passing a bipartisan farm bill will give Democrats in those states a strong argument to make on the campaign trail.”

Where is WSJ, Reuters and Bloomberg, that have treated Yingluck’s farm subsidy as evil incarnated?

Is pork and barrel politics right? is populous right? Right or wrong, the fact is, the likes of WSJ and Reuters, are hypocrites!

3)

Moody’s Rating on Thai Rice Scheme Gets 90% “Censored” in Thailand

Earlier in 2012, Finance Minister Kittirat Na Ranong, under intense pressure to review the rice scheme, argues that the rice policy will help the economy as it will boost consumer spending at a time when industry is suffering because of the global slowdown. The International Monetary Fund (IMF), in a June report on Thailand, agreed that the government’s various fiscal stimulus policies were opportune but it also said income redistribution schemes, especially the rice program, needed to be monitored and adapted if necessary to contain costs.

And indeed just months ago, Thai press “Massively Hyped Up” Moody’s statement that Thailand’s rice scheme will hurt Thailand’s credit rating. That Moody report based its facts, on what a Thai newspaper said. Perhaps, recognizing that most Thai press are “Simply Trash” Moody’s reversed its course, and said Thailand’s credit rating was not under threat.

The result? As Thai press “massively Hyped Up” the first Moody’s report, this “Moody’s Correction” was about 90% “Censored” in Thailand.

About 90% of Thai press, such as Bangkok Post, Nation and others, have “censor” the latest Moodys rating report on Thai rice scheme. After relying on a newspaper report, where in Thailand newspapers like Bangkok Post, the Nation, Krungthep Turakil and a string of other hate Yingluck press, are well-known as mostly “Politicized Trash” for making a credit rating call, Moodys made a correction, and said:

Thailand’s credit rating is not under threat from the rice subsidy scheme. Thailand‘s credit rating is not in danger of being downgraded because of its rice intervention scheme, rating agency Moody’s said on Thursday. ”The rating is not under threat. If you look at the credit analysis that we published in late April, there are a lot of factors that support the rating at the current level of Baa1, and that’s also why we have a stable outlook,” Moody’s sovereign risk analyst Steffen Dyck told Reuters. Moody’s Baa1 rating is at the lower to medium end of the investment-grade scale. Dyck described Thailand’s public finances as “comparatively strong” when set beside those of countries with a similar rating and said its economic growth outlook was “relatively robust”.

4)

Yingluck & Market Distortion

While in Thailand, about 80% to 90% of the anti Yingluck’s rice scheme, is about trying to win the next election by stopping populous policy, many foreigners that are against Yingluck’s rice subsidy just simply, because they are “Market Force Champions.”

The fact is, despite the Thai Rice Exporters Association, that have spearheaded the attack on Yingluck, being a “Monopoly” of about five firms, widely known in Thailand as the “Five Tigers” Yingluck’s rice scheme has greatly distort market mechanism. The global rice trade and price, from being mostly under control of that “Five Tigers” of Thailand, was now in the hands of the Thai government.

Yet, many business people, who are realist and wise about global issues, say there is no such a thing as “Free Market.” The closest are the stock and currency markets globally. And in fact, in Thailand, many even argue, that there is a “Banking Monopoly” and a “Chicken Monopoly” for example.

Why has these clearly “Monopolies and Oligopolies” such as banking and chicken not attack, such as Yingluck’s rice scheme, as distorting market force? Clearly, there is no “Political Angle” to attack such things as Thailand’s banking monopoly.

Even globally, Eurozone and USA “Massive” farm subsidy “Distort The Free Market.” In fact, in the USA, the USA government pays farmers “Not to Produce Food” to keep the price high.

Channel News Asia reports:

Sept 7, 2012

VLADIVOSTOK, Russia: Agricultural subsidies around the world are a waste of hundreds of billions of dollars and unaffordable in the wake of the global financial crisis, New Zealand’s prime minister said on Friday. Speaking at a business forum in Vladivostok ahead of the Asia Pacific Economic Cooperation leaders’ summit, John Key said cutting farming subsidies — which New Zealand eliminated in the 1980s — would promote economic growth. “Imagine the benefits of freeing up the hundreds of billions of dollars of taxpayer-funded subsidies which are poured into agriculture, fisheries and a number of other industries,” Key said. “With Japan, the United States, and the European Union all facing huge challenges to reduce their fiscal deficits and get public sector debt under control, what is plainly evident is that this level of subsidisation is no longer affordable or sustainable.” Key pointed to the example of New Zealand, which he said had the only “truly unsubsidised agricultural sector in the world”. “Unwinding subsidies is not easy, we in New Zealand know that from our own experience,” he said. “(But) farmers responded very quickly to the signals, they cut costs, they improved productivity, and they responded to market demand.” He said his country’s agriculture and wine sectors now had “arguably the best yields and highest productivity” in the world.

5)

Thailand’s Rice Competitiveness Matrix & Transparency

Lets forget about Yingluck’s rice subsidy, and talk about a typical businessperson and his product. Would not a business person want to have control over the product, like its price and image, and also other such as place and promotion? But what if that business person’s product is being attacked? Lets look at a product such as semi-conductors, very much a commodity but there is also quality differentiation. What if the press attacked, on a continuous basis, that there is an oversupply of semi-conductors? Would the price fall? What if a businessperson, sees his product quality, attacked on a continuous basis, as being out-dated? Would that affect the product in the market place?

What if much of the press attack, is “Rumor, Speculation and Fake News?”

Since coming to power about 2 years ago, and launched her rice subsidy, Yingluck was attacked on a continuous basis. There are literally, 100s of reports, many from the like of Reuters, that says vast amount of rice are being held un-sold in Thailand, and the stock-pile is so large, Thailand was running out of places to store un-sold rice.

The problem is, such information as Thailand’s rice stock, is kept secret for a good reason, and that is, the stock level would impact global market price of rice. Clearly, the like of Reuters, is basing its report on speculation, not fact.

But reports that Thailand is holding vast amounts of rice, have flooded the market for years, since the rice subsidy was started. And now, again, even Thai newspaper Thai Rath, reported today in the head-line as the big news of the day, that USA was worried about the quality of Thai rice.

In sum, the sheer amount of “Fake, Speculative and Rumor News” on the Thai rice is massive. Many argue Yingluck’s minister managed the rice subsidy badly, but others argue, it was the press that severely hurt the scheme.

Also, many neutral observers have noted that for some reason, global press has been hotly against Yingluck’s rice scheme, and has been on a mission to destroy the scheme. The attack is spearheaded by the likes of WSJ & Reuters, along with the local hate Yingluck press such as Bangkok Post.

Here is an example of what Reuters reported:

March 28, 2013

SUPHAN BURI, THAILAND — Thailand is set to sell 500,000 metric tons of rice on world markets at a loss as it scrambles to offload a record stockpile deteriorating in warehouses filled with grain bought under a government program.

The result, of such Reuters report, is that Thailand’s rice scheme competitiveness matrix, in the market place has been destroyed, ane Yingluck has accepted the fact, as the latest is that Yingluck has lowered the subsidy level.

And indeed, for a long time, much of the information on the Yingluck rice scheme has been kept a secret. Yingluck’s government has cited, “Competitiveness in the Market Place” as the reason to keep the rice scheme information, mostly a secret. Yingluck is correct here, that in normal business practice, information that could impact the price of a product, in the market place, are kept secret by most firms, as most businesses attempt to have control over the product, such as pricing. However, as the information is kept secret, there is a risk, such as the risk Moody’s created in using newspaper report for information.

In the Moody’s case, such a lack of transparency has cause an alarm on credit rating. Moody’s original assertion and its credit rating move before it reversed its position, in fact, is Moody’s in-directly demanding, to Thailand’s state secret. That information, on Thailand state secret, will be available to all Moody’s customers. The rice scheme competitiveness profile will be destroyed. Since then, Yingluck have talked about “Transparency” to her rice scheme.

6)

Press Playing God Over Thailand

While many, said the press such as Reuters attack of Yingluck’s rice scheme is about Reuters supporting the elite establishment, as its political coverage of Thailand shows, many says Reuters is just doing its job. That argument could be correct. But Reuters went much further, and took an “Active” and “Direct” role, far beyond appropriate journalism, in attacking the Yingluck’s rice subsidy.

Reuters report:

11/28/2012

The US has asked Thailand to respond to the WTO’s agriculture committee on Nov 14, according to an advance copy of questions seen by Reuters. The United States will challenge Thailand over rice subsidies at a World Trade Organisation (WTO) committee meeting next week, fearful that a government-sponsored crop could land up on the world market and depress prices, hurting US exporters. But Thai authorities are not worried by the move, saying agricultural subsidies have not violated WTO regulations. The government’s rice-pledging scheme, under which rice is purchased from farmers at above market prices, is expected to raise output, but has also been blamed for a slump in rice exports. Thailand now risks being dethroned as the world’s top rice exporter in favour of India or Vietnam. Thailand has said it is determined to remain the top exporter, causing the USA Rice Federation to worry that the rice stocks bought by the government will be released onto the world market at a loss. The US rice industry group has urged the US Trade Representative to take action against the Thai scheme, alleging that it acts as an export subsidy, which is prohibited by the WTO.

How did Reuters get the questions from the USA government? Clearly, the USA government gave it to Reuters, and was using Reuters, to establish a negotiation position with Thailand, sending a signal, that Reuters is on the USA side of the question.

7)

Thai Rice farmers

One bottom line, that the likes of WSJ, Reuters and Bloomberg, along with the Thai elite establishment press never mentioned, is of course, what the Thai rice farmers think. In research and polls of the Thai rice farmers, they said, quote: “Income Up, Debt Down, and Purchasing Power Up.”

The question to ask, is there any differences between the farmers in Thailand, to the farmers in advance country, such as the Eurozone and USA? The answer, of course, is that the likes WSJ and Reuters, is “Imperialistic in Nature.”

How can anyone, with a global outlook, sit and criticize Thailand supporting its rice farmers, who are mostly poor, when Eurozone and USA farm subsidy, vastly larger than Thailand’s subsidy, that have made farmers there a wealthy occupation. The answer, is of course, what good “Imperialist” cares about the Thai rice farmers.

The likes of WSJ and Reuters will never get away with what it did in advance countries like USA and Eurozone, as it did in Thailand. If WSJ and Reuters covered the Farm Subsidy issue in those countries, and do not go talk with the farmers, but just produce 100% assault of Farm Subsidy as they did with Yingluck’s rice subsidy, they will be crucified.

WSJ, Reuters, Economist etc try to report accurately and without emotion because their readership reputation depends on it, and they are expert economists. If they say the scheme is disastrous (financially) and unsustainable I would believe them. You conclude that no one asked the farmers, true, but please answer this: is it the farmer community and provinces who pay tax to finance all this, and how qualified are they to understand that this extra money may feel good in their pocket but must come from somewhere, and are they aware if all of it is reaching the poor who need it. That is an important question.

Thanks for comment, but we differ, as I do not believe journalist credibility are above questioning and I do not believe Thai farmers are stupid, and on tax, I am not a Thai elite establishment who says only tax payers should have the right to vote and get government spending money as it is their money. My suggestion, is that u read what I wrote with an open neutral mind & maybe u will see something not along the elite establishment line